Bryan T. Bostic leads a group of investors who want to bring baseball to Shockoe Bottom. Adam Ewing photos
In a few weeks, Bert Nasuti will do something that Richmond baseball fans have done for more than four decades: take in a Braves minor-league game. On April 17, he will attend the home opener of the Atlanta Braves' top farm team, and there is a strong chance Nasuti will be asked to throw out a ceremonial first pitch to inaugurate the 2009 season.
To the chagrin of local baseball fans, the 50-year-old attorney won't be making his pitch from a freshly landscaped mound at The Diamond, home of the Richmond Braves since 1985. Instead, he will help christen the Braves' new home: a gleaming $64.5 million ballpark built by Gwinnett County, Ga., a sprawling Atlanta suburb that lured the club from Richmond after negotiations with the city to build a new stadium here stalled.
Nasuti is an elected member of Gwinnett County's governing Board of Commissioners who tirelessly championed the idea of bringing minor-league baseball to the region, first proposing it to fellow commissioners during a 2006 retreat. The initiative gained enough momentum that the board issued $33 million in revenue bonds to fund construction of the 8,500-seat outdoor arena.
When Gwinnett commissioners first considered building a stadium, they were in the same position as Richmond is now — a locality without a team. Their first thought was to obtain a team from an independent league, but in 2007, Nasuti heard that the R-Braves had grown tired of wrangling with the city and then-Mayor L. Douglas Wilder about plans for a new ballpark. The rest is history.
"Once it became evident to the Braves that we were willing to build a stadium in Gwinnett, just up the road from the big-league club, they indicated they would be willing to move their farm team" from Richmond, Nasuti says.
For Gwinnett, it was great timing. But for Richmond, the move brought the agony of defeat after a four-decade relationship with the Braves. The team limped to a 63-78 International League record in 2008, closing out a Richmond run that started in 1966.
Ever since striking out with the Braves, some Richmonders have been working to get another turn at the plate. The city's administration is set to formally consider a plan that would allow a private developer to turn a swath of land in Shockoe Bottom into a bustling hub of entertainment, shopping, commercial activity and residences, all anchored by a brand-new baseball stadium. That, at least, is the grand vision.
City Council members last year voted in Highwoods Properties Inc., based in Raleigh, N.C., as master developer for the Boulevard Gateway project and for Shockoe Center, which includes land that bisects Main Street Station and the 17th Street Farmers' Market, on both sides of East Broad Street. Shockoe Center would require $318 million to $363 million in combined investment, according to Highwoods officials. The $45 million difference is a GRTC transfer center at Main Street Station that was included in preliminary planning documents.
"Without approval for the stadium, the entire project is in jeopardy," says Ralph L. "Bill" Axselle Jr., a Richmond attorney who represents Highwoods' development team.
Richmond City Councilman Bruce W. Tyler says something needs to be done to rejuvenate moribund development in Shockoe Bottom, but he stops short of endorsing the Highwoods blueprint.
Still, Tyler says, substantive development in Shockoe Bottom won't occur without a major project of some kind. "It's an urban wasteland, and 25 years from now, it will still be an urban wasteland if we don't do something dramatic to change it — be it building a ball field or take your pick."
Following the Money Trail
Highwoods Properties will ask City Council to consider a financing method that would facilitate construction of a ballpark — and the city will not be financially responsible for any of the financing for Shockoe Center, the developers say. The 8,500-seat stadium would be financed through $60 million in tax-exempt revenue bonds sold to private investors. Proceeds would fund construction of the stadium, including a concourse that elevates the ballpark above the flood plain.
The agreement between the city and Highwoods "will involve a capital reserve fund for major repairs and replacements. That will all be worked out during the final development agreement," Axselle says.
The ballpark and concourse would be publicly owned by a yet-to-be-created Richmond Sports Facilities Authority, which would also issue $60 million worth of bonds to begin construction, says Paul Kreckman, a senior vice president in Glen Allen with Highwoods Properties. Other revenue would come from long-term lease payments made by a team that occupies the stadium, he says.
Highwoods would spearhead development of the stadium, with other developers addressing the commercial portion. "What's different about our proposal is that we have private development that will be built at the same time as the stadium and concourse," Kreckman says. "We'll either get it all done at once or we're not going to do the deal."
Tax revenue from associated development in Shockoe Center would then be used to pay the debt on the bonds, which typically extend for 30 years. Once the bonds are retired, excess revenue would flow into city coffers to be used for whatever purposes officials decide.
No private facilities would be constructed with bond funds, but rather "independently financed through traditional private sources," says Kreckman, who predicts Richmond's tax coffers would swell by at least $3 million in new revenue as early as 2013.
"That's all city money — none of it goes to private developers. Our development will have no impact on the city's debt capacity. In fact, the city will be able to add [to its] funding capacity in the future, because the development would increase the city's tax base. That means we can build as many schools, improve as many streets and sidewalks, and fund as many other initiatives after the ballpark bonds [are floated] as we could before," Kreckman says.
The pitch sounds simple, but therein lies the curveball. Revenue projections are speculative, and Highwoods Properties' executives have yet to disclose a single retail or other prospective business tenant for the complex. And while it continues to tout the project in public meetings with city residents, at press time Highwoods Properties had yet to submit formal development proposals to the city. The developers gave the city's administration an Aug. 1 deadline to sign a letter of intent to progress with the project, placing it under Council's consideration.
Although it's mostly speculation at this point, City Council would likely vote on whether a city-owned portion of the land could be used, whether to approve the floating of bonds for infrastructure costs, and any special-use permits that may arise. Tyler says the proposal — if approved by the city administration — would reach the council in late September or early October. Highwoods also was chosen to redevelop commercial property on Boulevard, including tearing down The Diamond. According to city leaders, however, Boulevard Gateway is a lower priority and not an alternative to Shockoe Center.
"If we're going to work with this developer, my understanding is that the Shockoe Bottom [plan] has got to be done first," says Council President Kathy Graziano. "They don't have a fall-back plan. I think if they don't [get approval] for Shockoe Bottom, they'll scrap everything" planned for the city, which would put Richmond leaders back in the market for a master developer.
Richmond's normal method of issuing debt for capital projects is through general-obligation and revenue bonds, says Tammy Hawley, press secretary for Richmond Mayor Dwight C. Jones. General-obligation bonds are backed by the city's tax base, but revenue bonds are supported by a specific stream of revenue. Hawley notes, however, that "on face value, the developer's proposal is more complex than the normal debt financing the city is used to [carrying]."
The Jones administration has approved spending up to $100,000 to have three firms — Davenport and Co. and Chmura Economics & Analytics of Richmond, along with Economics Research Associates of Washington, D.C. — address a host of unanswered questions about Highwoods Properties' proposal, Hawley says. They are expected to report to the city by May 1.
The questions include the type of bonds being proposed and whether a market exists for selling those bonds to investors amid global economic turmoil. The team of consultants will also dissect revenue assumptions about the project, along with other aspects such as market overview, economic-impact analysis, and evaluation of potential risks or financial obligations to the city, Hawley says. It's also not clear who would assume responsibility for paying for repairs and replacement of big-ticket items at a would-be stadium: the city or the minor-league club that leases it.
Highwoods Properties says $363 million is needed for excavation, water and sewer work, construction and a raft of other development activities. That budget includes an anticipated
$255 million from private investors, another $55 million from sales taxes and fees derived from commercial development around the stadium, and $53 million worth of historic federal and state tax credits. The plan also calls for an entity — be it the city or a private funding source — to bankroll
$8 million in undefined "infrastructure" costs as part of the $363 million total, according to preliminary planning documents furnished by Highwoods Properties.
Hawley notes, though, that the infrastructure cost has not been verified and has been estimated to be as much as $15 million.
City Council was briefed on the project in private meetings with developers, but it's unclear when members might formally act on the proposals. Graziano says she has not made up her mind on whether Highwoods Properties' plans are viable, preferring to wait for definitive financial analysis.
Figuring out a way to manage storm-water runoff presents a chief challenge. "This development would impact where that water goes," Graziano notes. "All kinds of work would have to be done re-routing where storm water goes," yet the price tag for that extensive work isn't clear.
A state-law amendment that adds Richmond to a list of other localities asking to use a portion of state sales-and-use tax revenue for publicly owned sports arenas made its way through both houses of the General Assembly and awaits the governor's signature. Gordon Hickey, Gov. Tim Kaine's spokesman, says the governor is "generally supportive" of the measures but hasn't finished reviewing them.
Del. Manoli Loupassi, former president of Richmond City Council and co-sponsor of a House version of the bill, says it's a first step in helping the city turn the land into tax-generating property.
The measure permits the city to capture 2.5 percent of its portion of the state's 4 percent retail sales-and-use taxes. The money has to be used to build "qualifying public facilities," which can include sports arenas and attached structures. Loupassi says the Jones administration requested enough flexibility to allow the funding to be used for a new or a renovated stadium.
Taking Bold Steps
Highwoods Properties' proposal is similar to one suggested by the Richmond Baseball Initiative in 2003 and then again by the Richmond Braves and its development team in 2005 — a plan torpedoed by then-Mayor L. Douglas Wilder, who backed renovating The Diamond. The disagreement ultimately drove the team into the waiting arms of Gwinnett County.
Now the debate has been reignited, but this time without a team, although that could soon change. A group of investors, known as Richmond Baseball Club LLC, reportedly is working to acquire the Connecticut Defenders of the Class AA Eastern League. The City Council of Norwich, Conn., voted March 16 to authorize the transfer of Dodd Stadium's lease from the Defenders' owner to the Richmond investors, a first step in a likely franchise sale.
Plans call for the team to play its home games at The Diamond in 2010 and 2011 as it awaits construction of a new baseball park in Richmond, says Bryan T. Bostic, who heads the investment group. He says there are no plans for professional baseball to be played in Richmond in 2009.
Bostic says officials with both Minor League Baseball and Major League Baseball required that the paperwork be filed by April 1 to ensure sufficient time for reviewing it, including long-term plans for where a team would play.
That seems to leave the door open for the city to renovate The Diamond and lease it to the team. Clearly, however, it is not the investors' preferred option.
"We feel without question that [the]Shockoe Bottom location is by far the best location in the region," Bostic says. "It takes advantage of existing infrastructure, like parking decks, which sit empty now after 5 p.m., and takes advantage of both current and future transportation goals for the region," including long-range plans for a light-rail system in Richmond.
However, the city administration's deadline of Aug. 1 to decide Shockoe Center's fate means Bostic's investment group may have to move forward on a franchise purchase without any assurances that the team will get a new home field.
Bostic, who started an online museum-ticketing business that was later sold to Ticketmaster, dismisses critics who contend that building a new stadium is inappropriate at a time of deep recession. Bold steps are needed, he says, if the Richmond region wants to emerge as a contender, not a pretender, for top-tier entertainment facilities. Unlike Richmond, "[Gwinnett] recognized that minor-league baseball is a great family-entertainment amenity. We haven't had that [vision] in Richmond, but I think we can have it by going forward with this development."
But experts say scant evidence exists to support the idea that sports facilities spawn business growth. "Generally they don't provide many economic-development benefits," says Andrew Zimbalist, an economics professor and author of May the Best Team Win: Baseball Economics and Public Policy.
"Most people who go to a ballpark come from the immediate area. So what happens is you wind up transferring money from one entertainment venue to another; instead of going to the movies or to a restaurant, people go to a ballgame. That's fine, but the city hasn't made any new tax dollars," says Zimbalist, who has studied examples across the country.
The question for Richmond centers on determining investors' appetite for new bond issues, especially amid continuing economic misery. The broader Richmond region is experiencing historic job losses linked to the demise of several Fortune 500 companies. Moreover, revenue bonds by their very nature are more susceptible to economic turmoil than other options, financial experts say.
"It's pretty tough to get revenue bonds for municipal projects right now," says Preston Williams, executive director for the Gwinnett County Convention and Visitors Bureau, which acts as the landlord for the Braves' new stadium. "We got our bond committed just before the bond market got tough."
Another unresolved question centers on collateral should the project go into default. In the "unlikely event" that occurs, Kreckman of Highwoods Properties says investors could lay claim to their assets, in this case, the stadium and its concourse. He says that keeps the city of Richmond off the financial hook, at least in theory.
But will savvy investors really be content with a half-finished ball field and a useless concourse in a flood plain? "If the ballpark and concourse are going to be used as collateral, then the interest on the notes is going to have to be pretty darn high" to satisfy investors' rate of return, Zimbalist says.
Still, despite his skepticism of such development deals, Zimbalist acknowledges there may be long-range value to the proposal. "To the extent that it solves flood-plain issues — and assuming there is a real demand for the other development — then the ballpark could be a positive, and that would be atypical," he says.
Playing the Odds
Richmond has lost the Braves to Gwinnett County, but it can take something in return: financial wisdom. The initial price tag for Gwinnett Stadium came in at $45 million, with $33 million anticipated from revenue bonds and $12 million in cash.
Gwinnett officials have since revised their cost estimate to $64.5 million. As the U.S. economy tanked, interest rates on bonds soared, with investors seeking a guaranteed return. Skyrocketing costs for fuel, equipment and construction materials added millions of dollars more to the original outlay. After kicking in
$12 million in cash to jump-start the project, county commissioners had to dip into the kitty for another $19 million to cover the difference.
Nasuti is unapologetic. He boasts about the stadium's innovative features, including a 360-degree elevated concrete walkway, a recycled water system estimated to save 7 million gallons of water per year, two plumbing systems and a series of underground retention ponds.
Funding issues aside, Highwoods Properties' plans for Shockoe Bottom put Richmond's romance with history on a collision course with the unromantic world of high finance. Some local observers — including BaseballontheBoulevard.com — say the city should scrap the Shockoe Bottom discussion in favor of razing The Diamond and building a new facility in its place.
Tyler, for one, doesn't sound optimistic about reviving The Diamond. He says the 11,000-seat facility isn't suitable over the long term, particularly since it did not prove to be a magnet for development along the Boulevard. Still, one could ask if a baseball stadium would have a different fate downtown, serving as an economic panacea for the Bottom, as developers argue. Whether they knock a game-winning home run won't be known until the later innings of this contest.
NOTE: This article has been corrected since publication.